More Related Content Similar to The Wealthfront Equity Plan (Stanford Graduate School of Business 2017) (20) The Wealthfront Equity Plan (Stanford Graduate School of Business 2017)2. How do you attract and
retain the best employees?
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Example: Startup in Hypergrowth
• Company
• Consumer internet
• 50 employees
• San Francisco Bay Area
• Staffing Goal
• Grow employee base to 100 by end of the year
7. A compelling equity compensation plan
has four types of grants
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES
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New Hire Grants
• List all functions & expected
number of people to be hired
• Next, determine the market rates
to hire these individuals
• Let’s look at some examples
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Promotion Grants
• Employees who have been
promoted need to be at market
rate for their new position
• Two scenarios
• The person being promoted
has equity below today’s
market rate
• The person being promoted
has equity above today’s
market rate.
19. Now let’s focus on performance
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES
1.92% 0.5%
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Performance Grants
• Give additional equity to a limited
number of people to reward
performance (Top 10-20%)
• Bump needs to feel large, but
maintain equitable nature of the
entire plan
• 50% of equity grant for their
current role, if hired today
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Evergreen Grants
• Goal is to retain employees for
the long term
• Avoid vesting cliffs so employees
to avoid artificial anxiety points to
stimulate interest in new
opportunities
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Evergreen Scenario
• Start offering additional grants at
2.5 years. Predictable.
• Give 1/4 of current market offer
for their current role / title.
• In this case, 0.018% per year
(0.07% ÷ 4)
• Vests over 4 years
• Grant every year avoids cliffs
28. Add up all grant dilution
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES
1.92% 0.5% 0.125% 1.4%+ + +